S&P 500 bounced off support but trapped under April 5, 2021 gap

Here you can see the core trading channel for the S&P 500, and that Friday was a strong bounce off the bottom of the channel. However, the 4040 level has been a strong resistance/support level. Not obvious on the US500, but in the SPY this red area is a gap up that was not filled until May 9th. That region was tested several times in the days following that. You can see that this morning's price is flirting with this level again.

My guess is a false breakout above, and then down to the next trend line in the 3600 range. However, watch these lines and place your bets accordingly.

US500 4h

SPY 1D

Comment:

A look at 10am this morning.

Comment:

End of Monday and the region is still holding as resistance.

Comment:

Tuesday morning and low-volume overnight trading has jumped above the region (pump). If the correction is still in progress, then max over next day or so should be 4168 at the 1.618 fib level to test the center line of the green channel (dump). Will be important to watch the red trend line off the May 5th peak.

Comment:

Tuesday 10:45 am and price is back inside the red range. I would expect it to test the blue trend line. If we get a strong bounce, then we should continue higher. If it closes below that level today, then we might see further downside.

Comment:

Touched and a small bounce for now. Note that the blue line was off just a little and I had to tweak it, but it clear lines up much nicer with previous peaks.

Comment:

In case anyone is still watching this idea, here is what Wednesday at 3:25pm looks like. Strong rejection off of this region. The bull case for this rally is not over yet, but the poor earnings from Target and Walmart have spooked the market. Watch to see if the S&P can stay above the recent low.